A Look Into the Growth of the Renter Population
The government still favors homeowners over renters. Time for a change?
Any opinions expressed here are solely those of the writer.
The U.S. government has traditionally supported significant tax breaks and other measures to prod its citizens towards home ownership. The assumption has been that home ownership is the cornerstone of the American Dream, allowing families to accumulate wealth and security rather than pay their incomes out to third-party property owners.
In recent years, however, the home ownership picture has changed dramatically. Beginning in late 2007, the Great Recession was caused by over-borrowing against homes with values artificially inflated by dubious Wall Street speculation. It exposed the fact that home ownership could no longer be considered a sure thing or even perhaps the best use of one’s money, despite tax write-offs and incentive programs.
A look into the growth of the renter population
With banks greatly tightening their lending policies in the wake of the recession, more people found themselves unable to buy a home. According to the Census Bureau, by the second quarter of 2016 home ownership had reached its lowest point since the Bureau began recording it: 62.5%, down 0.9 points year-over-year and 6.7 points from the peak of 69.2% set in fourth quarter 2004. The population of renters has increased since the early 2000s across most age segments.
This begs a question: with the changing dynamics of renting vs. home ownership, why hasn’t the government shifted incentives and programs to help renters – many of whom now simply can’t hope to get a decent loan even if they decide that owning a home is the right option?
Assistance for low-income renters
Of course, there is already help for renters at the very bottom, in the form of Section 8 and other programs (though MPF Research reports that low-income housing in many areas is in woefully short supply.)
But what about renters who aren’t on the lowest rung of the ladder? While the middle class can still count on government tax deductions and write-offs including interest deductions, shelter from capital gains and deduction of property taxes, there’s no corresponding help for those who can’t or don’t wish to invest in a home during these unsure times.
In 2015, federal help for homeowners ($142.7 billion) still amounted to well over twice that for renters ($55.6 billion), as referenced in a recent article from MPF Research.
Policy experts have begun to weigh in on the issue, in support of a tax credit designed to support renting households that require the greatest assistance. A report by the Center on Budget and Policy Priorities as far back as July of 2012 stated:
“As the debate on tax reform progresses, policymakers should consider instituting a renters’ tax credit to help rebalance the nation’s housing spending and address a portion of the unmet need for housing assistance among low-income households. A renters’ tax credit capped at $5 billion would help about 1.2 million low-income households afford housing.”
Of course, a shift in government policies towards helping renters is transparently in the interest of rental property owners (including RealPage clients). But owners hope that lawmakers will see help for renters not as simply a boon to property owners who don’t need it, but instead as a boost to millions of renters who do – perhaps even more than those with the credit and cash on hand to buy a home.